Initially running the business from the country’s captail, Kapenguria, Paves Vetagro achieved this closeness with the communities by collaborating with local retailers who stock farm products. In 2021, the company opened two satellite branches, including the one close to Angura’s mud hut in Konya. The stores were financed with a loan of nearly €200 000 to Paves Vetagro that was backed by an EU financing tool called the Kenya Agriculture Value Chain Facility.
The European Investment Bank created the Value Chain Facility in 2018 to help commercial banks in the country give more loans to agricultural companies that help smallholder farmers. The facility is supported by a €50 million loan the European Investment Bank signed in 2018 with Equity Bank, a leading provider of finance to small Kenyan communities. The facility includes a €10 million grant from the European Union. The loan and grant enable Equity Bank to receive technical training and offer many smaller loans to Paves Vetagro and other companies and entrepreneurs.
In March 2021, the European Investment Bank signed a new loan worth €100 million with Equity Bank, and the European Union approved a €20 million grant. This new assistance will help a wide range of companies hurt by the COVID-19 pandemic, including those in the agricultural sector.
“The agricultural sector is the main contributor to employment in Kenya, and smallholders as well as small companies in the agricultural business are key players,” says Nicholas Nzioka, a senior loan officer for the European Investment Bank based in Nairobi. “However, these companies and farmers have limited access to banks or loans.”
Financial assistance for farmers is especially welcome in Kenya, where agriculture represents 23% of the country’s gross domestic product. Agriculture provides work for nearly 54% of Kenyans, but the many difficulties involved in getting a loan have hurt the sector’s development and modernisation. Less than 5% of bank loans in Kenya go to the agricultural sector, Nzioka estimates.
Getting a loan was not easy for Ririmpoi, the veterinarian who started Paves Vetagro.
“I tried to go to various financial partners, but because of where I was going to practice and do business, in the arid and semi-arid areas of West Pokot and Turkana, nobody believed in my plan,” he says. “But because I believed in the model and I had lived here, I knew that it could actually work. Although the community may not have a lot of money, actually they would be willing to pay for services.”